The Chancellor will use tonight's Mansion House speech to outline his support of the proposals by the independent commission on banking, in an attempt to cut the risk of a second major financial crisis in the sector. The banks have been expecting something like this, but the confirmation has seen their shares slip back. Barclays is down 3.75p at 260.9p, while HSBC has dropped 5.7p to 610.3p and Royal Bank of Scotland has dipped 0.33p at 41.22p. Lloyds Banking Group is 0.24p lower at 48.31p. Bruce Packard at Seymour Pierce said:

We believe the ICB recommended ring-fencing rather than full structural change to the industry (favoured by the Governor of the Bank of England), because ring-fencing had a much greater chance of being an acceptable "half way house" between doing nothing and full break ups. The implications for shareholders remain unclear. Much depends on whether capital markets believe that when (not if) the next crisis hits, BarCap, RBS or HSBC GBM, will be allowed to fail. If they do believe these divisions will be allowed to fail, then in return for providing funding to investment banking divisions, they should impose much greater discipline on these divisions. If the idea works, it would make the whole sector more resilient in a crisis, and a more investable proposition for equity investors.

The weakness in the banking sector has helped push the FTSE 100 down 11.97 points to 5791.16. Among the other fallers, ITV gave up some of yesterday's gains, down 0.7p at 67.5p but J Sainsbury added 0.7p to 327.5p following its figures.